Local Termination of MLM Activities: A Guide

The local termination of MLM activities is a key administrative procedure. It controls business conduct, ensures transparency, and protects consumer rights and commercial order. This article provides a detailed guide on the cases, penalties, and process for the voluntary or compulsory local termination of MLM activities.

Cases for the Local Termination of MLM Activities

According to Article 24 of Decree 40/2018/ND-CP, amended by Clauses 18 and 19 of Article 1 of Decree 18/2023/ND-CP, the local termination of MLM activities occurs in two specific cases:

1. Revocation of Local MLM Registration: The competent authority issues a decision to revoke the registration upon discovering serious violations during business operations.
2. Voluntary Termination by the Enterprise: An enterprise has the right to decide to cease MLM operations if it no longer wishes to continue with this business model.

In these cases, the enterprise must perform the local termination of MLM activities to avoid administrative penalties. An enterprise cannot cease operations without following the prescribed termination procedure.

Penalties for Non-Compliance with Termination

Operating an MLM business without a license or failing to terminate as required by local authorities leads to strict penalties.

Under Clause 5, Article 1 of Decree 24/2025/ND-CP (amending Point b, Clause 2, Article 56 of Decree 98/2020/ND-CP), an individual participating in an MLM business without meeting the required conditions will be fined from VND 10,000,000 to VND 20,000,000. For a violating organization, the fine is doubled, ranging from VND 20,000,000 to VND 40,000,000, as per Point b, Clause 2, Article 1 of Decree 24/2025/ND-CP.

The strict regulations in Decree 24/2025/ND-CP mean that both individuals and organizations face significant financial penalties for failing to comply with a termination order from a competent authority.

>>> See more at: Re-issuance of Certificate of registration of multi-level marketing activities

Procedure for the Local Termination of MLM Activities

To legally complete the local termination of MLM activities, an enterprise must understand the required dossier and the implementation process. This guide provides a comprehensive A-to-Z overview of the procedure.

Dossier Preparation

A correctly prepared dossier is crucial for a swift and lawful process. The required documents vary depending on the reason for termination.

As per Article 18 of Decree 40/2018/ND-CP, amended by Clause 13, Article 1 of Decree 18/2023/ND-CP, the dossier for the local termination of MLM activities differs for voluntary termination versus termination due to registration revocation.

For voluntary termination of local MLM activities, the dossier includes:

• A notification of termination of local MLM activities, using Sample Form No. 06 from the Appendix of Decree 18/2023/ND-CP.
• A report following Sample Form No. 06a from the Appendix of Decree 18/2023/ND-CP.
• The original of the most recent amended certificate of business registration or equivalent legal document.
• The original certificate of MLM registration.
• A copy of the decision on terminating MLM activities from the sole proprietor or owner of a single-member LLC; or the decision and meeting minutes from the Members’ Council of a multi-member LLC, the General Meeting of Shareholders of a joint-stock company, or the partners of a partnership.

For termination due to revocation of local MLM registration, the dossier includes the same documents as above, excluding item 5.

>>> See more: SAMPLE NOTICE OF TERMINATION OF MULTI-LEVEL MARKETING ACTIVITIES IN THE LOCALITY 2025

Termination Process

The local termination of MLM activities requires strict adherence to a legal process.

Article 18 of Decree 40/2018/ND-CP (amended by Decree 18/2023/ND-CP) and Article 48 of Decree 145/2025/ND-CP on decentralization specify the process based on the termination case:

For voluntary termination of local MLM activities:

• Step 1: The enterprise submits the dossier for the local termination of MLM activities to the Provincial People’s Committee via direct submission, online portal, or postal service.
• Step 2: If the dossier is incomplete or incorrect, the Provincial People’s Committee will notify the enterprise. If the enterprise fails to amend the dossier within 15 days of receiving the notice, the dossier will be returned with a clear reason.
• Step 3: Within 10 working days of receiving a valid dossier, the Provincial People’s Committee will issue a written confirmation of receipt, notify Provincial People’s Committees nationwide, and publish the information on its official website.

For termination due to revocation of local MLM registration:

• Step 1: The enterprise must submit the dossier to the Provincial People’s Committee within 30 working days from the date the Certificate of Registration is revoked.
• Step 2: Upon receiving the dossier, the Provincial People’s Committee follows the same receipt and processing steps as in the case of voluntary termination.

The legal framework clearly defines the process, from dossier submission to final confirmation. Following these steps ensures legal compliance and a smooth termination process.

>>> See more at: MLM Registration Service in Vietnam

Consulting and Authorization Services at Long Phan Consulting

Long Phan Consulting Company offers expert consulting and authorization services for the local termination of MLM activities. Our experienced team supports enterprises in navigating the legal process quickly and effectively. Our services include:

• Advising on legal obligations after the local termination of MLM activities.
• Assisting in preparing the termination dossier based on the specific case.
• Providing detailed guidance on the termination procedure.
• Drafting termination notices, required reports, and explanatory or appeal letters (if necessary).
• Acting as an authorized representative to submit the dossier, monitor the process, work with competent authorities, and deliver the final results to you.

With years of experience in business law consulting, Long Phan Consulting Company guarantees high-quality, legally sound, and effective services.

Frequently Asked Questions on Terminating Local MLM Activities

To provide a clearer understanding of the process, we have compiled answers to common questions about the local termination of MLM activities.

What core information is required in the final MLM activity report (Form No. 06a)?

This report requires details on the network’s status, a complete record of financial obligations (commissions, bonuses), a summary of repurchased goods, and a commitment statement confirming all responsibilities towards participants have been fully resolved.

How is the enterprise’s security deposit handled upon termination?

The security deposit serves as a guarantee for the enterprise’s obligations to its MLM participants and consumers. The enterprise can only have its deposit returned after all related debts are paid and the Ministry of Industry and Trade confirms the completion of all obligations (Clause 2, Article 53, Decree 40/2018/ND-CP).

Can an enterprise resume MLM business after voluntary termination?

Yes. However, the enterprise must undergo the MLM registration procedure again from the beginning and meet all current legal requirements, just like a new enterprise.

Does the termination procedure apply if an enterprise goes bankrupt?

When an enterprise goes bankrupt, its business activities are terminated according to the Bankruptcy Law 2014. The resolution of obligations towards MLM participants becomes part of the asset liquidation process conducted by an asset manager or liquidator.

What are the most common mistakes enterprises make during this procedure?

Common errors include submitting incomplete or incorrect forms, failing to report honestly and fulfill all obligations to participants, and not adhering to the legal timelines for notification and resolution of rights.

These answers address key aspects of the procedure. For more detailed advice, please contact our experts via the hotline below.

Conclusion

The local termination of MLM activities is a mandatory legal procedure for any enterprise ceasing this business model. If you have questions about this process, contact our hotline at 1900 636389 for in-depth consultation and a detailed quote from our team of experts.